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The usual ones that people name are Venezuela and Zimbabwe, and in those the hyperinflation isn't just a monetary phenomenon that the states decided to self-destruct with; it's a symptom of a whole cascade of failures, including economic sanctions on the country!

Hyperinflation in those cases is effectively a forex phenomenon. The country stops producing any useful export goods (or is banned from exporting, or in the case of Weimar Germany forced to export gold at gunpoint), so the value of its currency collapses. Because the country still requires imports, especially oil, the value of those goods shoots up - but you can't save the economy from this by printing local currency.

(Can someone name a 20th century country with hyperinflation that wasn't under sanctions or involved in a war?)

> (Can someone name a 20th century country with hyperinflation that wasn't under sanctions or involved in a war?)

But in contrast, can anyone name a 20th century country with deflationary policy who broke under sanctions or came off badly when involved in a war?

Flirting with deflation is much safer policy than flirting with inflation. Although a fair point that hyperinflation is associated with cascades of failures that still suggests that flirting with high inflation is more destabilising than flirting with very low credit levels. If anyone responded to cascades of failures by highly deflationary policy they don't seem to have made it into the well-known-failed-states pile.

Japan is a pretty classic tried-deflation example and they ended up a really stable, well organised society that honestly looks like a pretty nice place to live. Well educated. Modern. One of the leading countries on the Asian continent in fact. People complain that the rich aren't getting rich fast enough in Japan which I don't think is a great complaint.

> Japan is a pretty classic tried-deflation example and they ended up a really stable, well organised society that honestly looks like a pretty nice place to live. Well educated. Modern. One of the leading countries on the Asian continent in fact.

All the exact reasons I don’t think anyone in the USA is keen to try deflation!

> Japan is a pretty classic tried-deflation example

Er, https://en.wikipedia.org/wiki/Lost_Decade_(Japan) ? It wasn't so much "tried" as "was unable to avoid" deflation.

(The relation of particular economic conditions on paper to how nice a country is to actually live in is a different and much more complicated subject!)

I don't think there have been countries which have tried deflation in response to dysfunctionality, because part of dysfunctionality is being unable to pick good policy options and make them stick; but there have been quite a few who've responded to currency trouble by giving up their own currency and either dollarising or joining the Euro. The consequence of that in Greece was deflation: https://www.reuters.com/article/us-greece-economy-inflation/... ... and the "austerity" that went along with it.

> (Can someone name a 20th century country with hyperinflation that wasn't under sanctions or involved in a war?)

Maybe not hyperinflation, but Turkish inflation was rarely below 60% from the late 70s until 2002, and in the last few years has been in the 15-25% range.

Which one of those years wasn’t Turkey involved in a war?

Given the US has been involved in a war for decades that's a rather broad brush

Yeah, look at many countries in latin america with the prime example being Argentina.

Just the same way you see drug dealers "cutting" down their product to skim some off the top and pass it on to the unknowing consumer, the newly created money becomes a way to skim money without the citizenry knowing exactly whats going on.

Monetary inflation isn't a natural law. If you don't do it, it doesn't happen.

>I can fathom why governments call deflation the big enemy.

The answer lies in who the governments are that are saying that. They're the advanced economies which are well developed and have good regulatory systems, the ones that have little to no risk of hyperinflation. And, for them, deflation is worse than some (non-hyper) inflation. It's also much harder to get out of, Japan is still sort of stuck 20-30yrs later despite taking more and more extreme measures.

To circle back to the parent comment topic, ie. people think printing money always causes inflation: You mention Japan. They have printed so much that their central bank owns about 45% of the national debt. And they still have no inflation.

>we keep having mysterious debt-fueled collapses.

I don't think they're that mysterious. Most seem to be caused by human irrationality / group-think (bubbles), in combination with complex financial instruments that magnify the effects of a burst (ie. unwinding of massive leverage).

Armchair economist here, but isn’t Japan a surplus country with a very strong (safe-heaven) currency? Does that not impede inflation to take off?

https://tradingeconomics.com/japan/current-account

On a more global note, each economy is different and one can’t expect the same results from similar measures. The MMT advocates saying that ‘The economy is not a household’ and ‘Deficit does not matter’ advocate for a very dangerous path to walk for many countries that can’t print a strong currency.

>There are no counters that I'm aware of that have suffered a deflationary collapse.

Isn't that because long term deflationary currencies are quite rare? I'm genuinely asking, I was under the impression that deflationary collapse was rare because systemic deflation was rare, not because it was common and working just fine.

The arguments as to why deflation is bad always seemed fairly simple and common-sense (if you earn money just by having money without taking any risks nobody invests anymore and economy grinds to a halt, basically).

>If I look up the Wikipedia page for deflation I'm given hellholes like Hong Kong and Japa... no, wait, those are some of the places I'd actually prefer to live than where I am now.

You make it sound like these places became what they are because of deflation. That's a very peculiar read of that wikipedia entry IMO:

>Following the Asian financial crisis in late 1997, Hong Kong experienced a long period of deflation which did not end until the 4th quarter of 2004. Many East Asian currencies devalued following the crisis. The Hong Kong dollar however, was pegged to the US dollar, leading to an adjustment instead by a deflation of consumer prices. The situation was worsened by the increasingly cheap exports from Mainland China, and "weak Consumer confidence" in Hong Kong. This deflation was accompanied by an economic slump that was more severe and prolonged than those of the surrounding countries that devalued their currencies in the wake of the Asian financial crisis.

As for Japan, while it's definitely still a extremely important economy they lost a massive amount of ground since the 90's. I don't know if deflation made things better or worse, but it's not like it's been a massive success story.

I consulted https://en.wikipedia.org/wiki/List_of_countries_by_Human_Dev...

On practical measures, Japan looks like a massive success story. It looks like the best >100mil population country outside the Anglosphere, with whom it is perfectly competitive.

My family jokes sometimes that we wish we could still afford Japanese goods. I heard that the reason we don't see many Japanese students in Australian universities is because the Japanese system is too good.

I mean, why are we avoiding this sort of failure? It looks a lot like our success. The Japan of today isn't the Japan of ten years ago, but is this the worst case scenario of deflationary policy? Where are the failures?

Your question for examples of severe deflation is a bit like questioning the social distancing measures against COVID-19: If the policies work, it looks like they are useless - after all, deflation never really happens, right?

The US had many deflational episodes: https://en.wikipedia.org/wiki/Inflation#/media/File:US_Histo...

But none since Bretton Woods.

The current deflational examples like Hong Kong and Japan are no hell holes because deflation was 0.1% (HK) or 2% (Japan) - because of monetary and fiscal interventions.

> Who knows, it might work.

Frightening!

Whereas, we know the debt-fuelled-collapse-cycle works, insofar as it inspires economic-confidence in those that need that sort of thing.

My guess is that’s why we keep doing what we’re doing: there doesn’t appear to be any reason not to, and the alternatives might cause a whole lot a whole lot of discomfort.

It's because the true, severe deflation is accompanied by mass unemployment and contraction of the economic output.

1930s is a great example, you know well what came next after the economies got almost killed and people got angry.

I, too, would personally prefer deflation - I could buy cheap assets.

>It's because the true, severe deflation is accompanied by mass unemployment and contraction of the economic output.

That's not the case with deflation in general; there were deflationary episodes before the 1930s where this didn't happen (e.g. https://en.wikipedia.org/wiki/The_Great_Deflation). The difference in the 30s is that a wage floor was imposed, so wages couldn't fall to adjust to the increased purchasing power of the dollar, so there was massive unemployment. Labour economists nowadays refer to this as "sticky wages".

Imagine if there was 90% deflation now. A dollar would buy ten times more, but a minimum wage worker would be ten times more expensive. If the minimum wage wasn't adjusted downwards to match the deflation, then suddenly nobody could afford to pay minimum wage, so a huge amount of people would be out of a job.

True. You're right that the topic of deflation is handled rather "bluntly". Also, I can see some benefits of inflation - for example to slowly dilute govt debt after some government gets over-indebted. My point is that it cannot be judged by a simple always good / always bad attitude.